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Financial Planning / Tax Strategies
|Subject: Re: selling stock to pay for school||Date: 5/1/2013 6:45 PM|
|Author: TMFPMarti||Number: 118563 of 123001|
I have money saved for my son in a Coverdell Education IRA and also shares of DODBX in a UGTMA account.
I'm going to stop you here since your questions about the Coverdell indicate that you know nothing about how they work. Please get yourself a copy of IRS Publication 970 and devour Chapter 7. After that holler back if something is unclear.
The UGTMA account is your son's money. There is no tax benefit to his using this for secondary school tuition. Any capital gain or loss on the sale creating the cash would be reported like any other sale on his Schedule D. (I'm assuming that this would be an allowable use of money from this account, but that's not a tax law question, and I'm not a lawyer.)
From a purely tax perspective using money from the Coverdell is better since as long as you don't withdraw more than the qualified expenses there is no tax liability.
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